Shares in Japan Airlines Corp. nosedived 81 percent to just 7 yen (8 cents) on Wednesday amid expectations the money—losing airline will file for bankruptcy protection as soon as next week and be removed from the stock exchange.
Investors dumped shares in the airline, known as JAL, with the stock plunging 30 yen - the maximum one -day decline allowed in JAL’s stock - from Tuesday’s finish of 37 yen.
Asia’s biggest airline is set to file for bankruptcy protection as early as January 19, with its shares to be removed from the Tokyo bourse, Japan’s top business daily Nikkei and the major daily Asahi said.
“Investors are rushing to unload JAL shares before they become worthless. The reports that JAL could be delisted sparked massive selling,” said Masatoshi Sato, market analyst at Mizuho Investors Securities Co. Ltd.
Trading volume for JAL stood at 823 million shares, over a quarter of Wednesday’s total volume of 3.1 billion shares on the Tokyo Stock Exchange’s first section.
JAL also tumbled on Tuesday by its daily limit of 30 yen.
The Nikkei 225 stock average fell 144.11 points, or 1.3 percent, to close at 10,735.03 on Wednesday.
Following JAL’s bankruptcy filing, JAL president Haruka Nishimatsu, is expected to resign.
The state—backed corporate turnaround body responsible for JAL’s restructuring has asked Kazuo Inamori, founder of electronics component maker Kyocera Corp., to head JAL during the restructuring.
The turnaround body - the Enterprise Turnaround Initiative Corp. of Japan - also said on Wednesday that its restructuring plans “aim to secure ample funds to allow JAL to continue normal flight operations and business,” reassuring consumers and investors of uninterrupted customer service and payment for leased aircraft.
Inamori, 77, agreed to head the company after a meeting on Wednesday with the turnaround officials. He said he was confident the airline could return to a solid footing.
“We can rebuild JAL, as long as we steadily achieve restructuring plans,” Mr. Inamori told reporters. “I will strive for the happiness of the employees.”
While JAL is teetering on the brink of bankruptcy, its access to Asia is a prized asset for other airlines.
Delta Air Lines Inc. - the world’s biggest airline operator - and its rival American Airlines are vying for a stake in JAL to secure it as a partner and expand their Asian networks.
American Airlines, along with its alliance partners, on Tuesday boosted its offer of support to JAL to keep the money—losing airline with the oneworld family.
American, British, Airways, Qantas Airways and Cathay Pacific Airways said they are ready to inject $1.4 billion cash into Japan’s flagship carrier, up from $1.1 billion. They will also guarantee $2 billion in revenue over the next three years if JAL stays in the alliance.
Delta and its SkyTeam partners, for their part, have offered $1 billion, including a $500 million equity investment.
Following its bankruptcy filing, JAL is to slash about 15,600 jobs - 33 percent of its group work force - under a restructuring plan being hammered out by the state—backed corporate turnaround body, Kyodo has said.
The turnaround body will ask banks to forgive 350 billion yen ($3.8 billion) of debt owed by the airline, the Nikkei said during the weekend.
JAL’s debt stood at 1.5 trillion yen, according to its earnings reports in November last year. The Asahi said Monday JAL’s debt exceeded assets by 800 billion yen. A JAL spokesman declined to confirm the report.